Samsung may queue up behind Apple for single-brand retail licence in India

Samsung may join Apple in applying for a singlebrand retail licence as the electronics giant looks to strengthen its presence in a crucial market.Gulveen Aulakh | ET Bureau | February 04, 2016, 07:35 IST

NEW DELHI: Samsung may join Apple in applying for a singlebrand retail licence as the South Korean electronics giant looks to strengthen its presence in a crucial market, said executives aware of the matter.

Chinese smartphone maker Oppo, a relatively new entrant, confirmed its intent to apply for a direct presence in India, which eased foreign direct investment rules for single-brand retail in November. Chinese smartphone makers Xiaomi and Gionee are also keen on such a move. ET reported last month that Apple had filed for a single-brand retail licence.

Samsung executives said the company was looking at “opportunities” stemming from the policy but a final decision hadn't been taken. There was no response to questions emailed to Samsung, which has 1.5 lakh points of sale in the country.

Oppo, the fifth-largest smartphone player in China, plans to set up 35,000 outlets by 2016-end in India, including exclusive and franchise stores. Such a licence “will bring best brand image and service to local customers,” said Sky Li, global vice president for the international mobile business, affirming the company’s direct retail plans. He didn’t say how many stores it would open on its own.

India eased foreign direct investment (FDI) rules for single-brand retailing in November. It relaxed mandatory local procurement conditions for high-tech companies and allowed single-brand licence holders to sell their products directly online. The South Asian nation's fast-growing market, which surpassed the US to become the world’s second largest with 220 million active unique smartphone users in 2015, saw several Chinese brands entering last year. More are expected to come this year.

Each is taking online and offline routes to sell phones, with some considering single-brand retail. Not all companies need to have their own stores, analysts said. “Single-brand retail licence for all mobile phone makers doesn't make sense,” said Arvind Singhal, chairman of consultant Technopak.

“For small brands trying to establish themselves in India, unless they’re willing to commit hundreds of crores into building the brand, it makes no sense to apply.” It’s better to invest in conventional media to create awareness, he said.

For bigger companies such as Apple, Samsung and Sony, the strategy is relevant as they can set up marquee stores and run them the way they want to. Globally, Apple owns its stores while in India its products are being sold through stores run by distributors and other retailers. “Apple and Samsung are power brands, so customers make an effort to go to an exclusive store,” Singhal said.

Sony India sales head Satish Padmanabhan said the company hadn’t applied for a licence yet but was “keenly observing the government's initiatives and announcements." Companies that have a low-margin, low-price strategy may be better off selling through others, said Pinakiranjan Mishra, sector leader for retail and consumer products, EY India.

Xiaomi’s India boss Manu Jain has said previously that singlebrand retail was a positive move and that it was "keen” on filing for it but is yet to take a final call on the matter. Lenovo and Motorola aren’t interested in the singlebrand route as they already have channel partners with strong market presence, India head Amit Boni has said.